Growth prospects sound pitchy for American Idol owner CKX

Robert F.X. Sillerman's audacious bid to become the ultimate Baby Boomer may not be over. But as Ryan Seacrest might put it on American Idol -- the mega hit TV show that Sillerman controls -- the onetime radio and concert mogul's dream isn't safe.

Sillerman's quirky little company, CKX -- which, in addition to Idol, bought the marketing rights to generational icons Elvis Presley and Muhammad Ali -- said on Monday that it's in talks about "a possible transaction involving the sale of the company." CKX says it made the announcement "in response to market rumors," language that seems designed to trivialize an apparently solid report The Wall Street Journalposted on its website on Friday.

The paper says that JPMorgan private-equity unit One Equity Partners is prepared to pay about $558 million, or $6 a share. If correct, then that would be quite a come-down from 2007, when Sillerman and Idol-creator Simon Fuller offered $1.3 billion to take the company private. That deal collapsed during the 2008 credit crunch.

Sillerman created CKX in 2005 with the belief that digital technologies have sapped the power of TV networks, radio stations, record companies and other traditional media to create mass-market superstars. TiVos, iPods, cellphones and DVD players give consumers control over what they see and hear -- and they tend to choose names they already know.

He snapped up trophy superstars and searched for opportunities to market them. At one point there was talk, which he neither confirmed nor denied, that he wanted to land the rights to The Beatles.

But Sillerman has yet to prove that his big idea is durable enough to sustain CKX.

Prospects for American Idol, which accounted for 24% of the company's $328 million in revenues in 2009, sound pitchy. Revenues from the show, related merchandise, and the annual summer concert tour fell 17.5% last year.

And who knows what will happen in 2011 when the show's biggest star, Simon Cowell, leaves to prepare a U.S. version of his own talent show: The X Factor.

Fuller also is moving on. He left CKX in January to create XIX Entertainment, although he remains a consultant for Idol.

Seacrest will remain through 2012 as a result of a contract he signed with CKX last year. It guarantees the show host at least $30 million a year in salary and $15 million in merchandising rights, although an undisclosed part of that would be shared with the other two largest stakeholders in the show -- Fox and FremantleMedia.

Meanwhile, there isn't a whole lot of shaking going on in the Elvis business. Ticket sales to Graceland were up slightly last year, but revenues at the adjacent hotels were down a bit. Yet CKX took a write-off on major redesign plans for the tourist attraction, saying in its latest annual report that there's a "strong likelihood" that they'll be overhauled or dropped.

Sillerman also has to keep an eye on the calendar. He used his 21% stake in CKX as collateral for a $50 million personal loan, according to company filings at the Securities and Exchange Commission. He could be considered in default if CKX shares drop below $3 on any day up to April 26, and $4 after that date.

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